James Karl Associates Law Office - Marco Island Florida Attorney

Business Formation

Florida Sole Proprietorship. In a Florida sole proprietorship, one owner controls the business and assets. A Florida sole proprietorship is not taxed separately from the owner. The owner declares the business income or loss on the owner's personal income tax return ("pass through" taxation). However, the Florida business owner is personally liable for all the business's debts and obligations.

Florida General Partnership. In a Florida general partnership, two or more persons agree to operate a business together for profit. Every partner has the power to make contracts on behalf of the partnership and these contracts are binding on all of the partners, even if they did not consent. Each partner is personally liable for all of the partnership's liabilities, and a creditor is entitled to collect all monies due from a single partner. A Florida general partnership is not taxed separately from the partners. The partners declare partnership income or loss on their individual income tax returns ("pass through" taxation).

Florida Limited Partnership. In a Florida limited partnership, one or more general partners manage the business and are personally responsible for all of the partnership's liabilities. One or more limited partners contribute capital and receive a share of the business profits. Florida limited partners do not take part in managing the business, and if they are too active in the running of the business they are subject to losing their "limited" partner status and risk becoming personally liable for the business. A Florida limited partnership is not taxed separately from the partners. The partners declare partnership income or loss on their individual income tax returns ("pass through" taxation).

Florida Limited Liability Company. A Florida limited liability company has "members" who usually own and manage the business. However, a Florida limited liability company is allowed to have non-owner "managers" run the company instead of members. Florida allows a single person to operate as a limited liability company, but some states require that a limited liability company consist of two individuals. Members are not personally liable for the debts and obligations of the limited liability company. The Florida limited liable company is not taxed separately from its members. The members declare company income or loss on their individual income tax returns ("pass through" taxation).

Florida Corporation. Unlike a Florida sole proprietorship or a Florida partnership, a Florida corporation is recognized for all purposes as a legal entity separate from its owners. A corporation is a hierarchy. The shareholders are investors who have little say in the management of the corporation. Shareholders elect a Board of Directors and the Board of Directors designates officers to carry out the business of the corporation.

"C" Corporations. A "C" corporation is a separate tax-paying entity whose profits are subject to corporate income tax rates. Shareholders are not personally liable for the debts and obligations of the corporation.

"S" Corporations. An "S" corporation may have no more than seventy-five shareholders and they must be U.S. citizens or resident aliens. There can be only one class of stock. An "S" corporation is taxed like a partnership, and the shareholders are not personally liable for the debts and obligations of the corporation.